Supply chain mapping: What is it, and how does it work?
HAVE you been wondering how to detangle the networks within your supply chain in a way that allows you to gain visibility, and push for transparency? That’s what supply chain mapping does.
Let’s look at this way. A report by the Federal Reserve Bank of Kansas City revealed that the value of exports from China, a major stakeholder in the global supply chain, declined by more than 30 percentage points in February 2020, reflecting the effects of the Wuhan lockdown.
China would have been able to lessen the negative impact of the lockdown on trade if strategic supply chain mapping was adopted to recognize information gaps, and locate high-risk points of failure.
Like China, may companies need to understand the vitality of supply chain mapping.
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Supply chain mapping (SCM) is the practice of connecting all supply sources at every value chain level. This mapping gives suppliers and manufacturers an endto-end picture of the supply chain, including raw materials sourcing, production processes, logistics, and distribution of finished goods.
SCM is the foundation for building a risk management, due diligence, and responsible sourcing program in your supply chain.
The process of supply chain mapping is an offensive and defensive move that adds resiliency and agility to your supply chain by focusing on capturing information from all suppliers or individuals involved in the supply chain. This helps to track and visualize the origin and flow of goods and services from beginning to end, detect any risk beforehand, and create solution maps to improve it.
According to the International Port Community Systems Association (IPSA), only 28.2 percent of the 174 member states of the International Maritime Organization (IMO) possess functioning Port Community Systems (PCS). A PCS is essential for optimizing, managing, and automating logistics-efficient processes through single data submission, connecting transport and logistics chains.
The COVID-19 pandemic has shown that ports that are major players in the supply chain need a PCS to digitize their system. Let’s do an exploratory analysis of the SCM processes and why it is essential to the global value chain and smooth-running of international trade.
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Mapping your supply chain is a massive step to managing your production, but first, you need to understand if you are operating a linear (circular) or network supply chain. As a stakeholder, remember that you are mapping the entire supply chain. Hence, before following these steps, you must have decided on the stakeholders involved in your production process and how you intend to use them to achieve your goals and avoid supply disruptions.
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As a company, you need visual collaboration software or a flowchart tool to create a high-level outline of your product flow from the source to the finished product. When you have a list of the suppliers arranged in their order of importance to your supply chain, include the following: Their company name; Headquarters and manufacturing locations; Contact information; Products or services; Annual spend, and Supplier tier in the database.
Make sure there is no information loophole in your supplier’s list, gather information about them from public sources, and contact other suppliers or compliance representatives to get the latest information about your supply networks.
Establish costs, timings, and production scope
As a stakeholder, you should work out the costs and timeframes involved in each part of the supply chain. Consider how costs and timeframes produce or prohibit value for suppliers within the supply chain.
Calculate how long each element takes on average, including small things (e.g., receiving an email reply from your supplier) and more important things (e.g., transportation of goods to the customer).
When you have a cost and timing database for each supplier spelled out in your database, you can make informed decisions on which supply to use to get maximum value for your money within the production process.
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Ensure that there is a data point within your database for the current suppliers you are using and potential ones you can replace them with in case of unforeseen delays or issues with the current ones.
Also, you can ask your first-tier suppliers to join the mapping process. They can then send the same invitation to second-tier suppliers, and so on. As the database expands, you and your suppliers get a better view of potential risks, bottlenecks, and the dangers of relying on single suppliers and businesses with long lead times.
Identify risks for each supplier in the database.
Acknowledge the risks associated with each supplier, including political, legal, economic, and environmental threats. Does your supplier operate on cheap labor or fair working conditions? Use conflict minerals? At risk for corruption, human rights violations, or environmental degradation?
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Track the flow of information and data through the supply chain using your wellestablished database. Use communication channels like Slack or other software to transfer information efficiently, including orders, shipments, and returns between suppliers.
What is the importance of supply chain mapping to companies and businesses?
Supply chain mapping is crucial to companies and businesses, especially ones that deal in domestic and global supply chains, as it ensures the following.
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In the wake of supply chain disruptions and global shortages, suppliers and manufacturers quickly recognize the need for greater visibility over their supply network, from documenting the origin of material components to tracking shipments.
The process of supply chain mapping is an offensive and defensive move that adds resiliency and agility to your supply chain by focusing on capturing information from all suppliers or ind ividuals involved in the supply chain
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An analysis revealed that around 11 percent of all shipped goods are currently stuck at sea. This could have easily been mapped and avoided with SCM, including the ripple effects of the Suez Canal gridlock. It can quickly provide logistics solutions such as air freight to ease bottlenecks and meet production deadlines.
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Worldwide, massive product shortages affect groceries, food products, semiconductors, aluminum, plastic, and building materials. Stakeholders using SCM can quickly mitigate additional risk by mapping to create solutions to shortages and low manufacturing outputs.
Supply chain mapping allows stakeholders to put strategies in place that rapidly react to supply chain problems such as shortages, the surge in demand, misplaced orders, warehousing and inventory challenges, or other issues that might arise in the global value chain. Basically, it increases responsiveness and limits blowback from disruptions.